In August 2008, Hudbay acquired Guatemalan mining company Compania Guatemalteca de Niquel (CGN) and its Fenix mine property near El Estor, Guatemala. The Fenix property had been a fully operational nickel laterite mining and smelting operation in the 1970s until it was placed on care and maintenance in 1980. In August 2011, Hudbay divested itself of the Fenix project and no longer has any operations in Guatemala.

Prior to Hudbay’s ownership, CGN had adopted the Voluntary Principles on Security and Human Rights (the “Voluntary Principles”), as well as the United Nations Code of Conduct for Law Enforcement Officials and the Basic Principles on the Use of Force and Firearms by Law Enforcement Officials. The Voluntary Principles were developed by a partnership of NGOs, national governments and extractive industry and energy companies, and guide companies in maintaining the safety and security of their operations within an operating framework that ensures respect for human rights and fundamental freedoms.

CGN was actively involved with local communities and all levels of government to ensure the project delivered enduring benefits to the people of Guatemala. Through agreements with communities and various outreach programs provided under the direction of RAXCHÉ, a non-profit foundation, CGN worked collaboratively with local communities to support the development and enhancement of health, education and cultural centers and to increase environmental understanding in the region.

CGN had persistent issues with illegal land occupations that began in 2006, two years before Hudbay acquired the project. When the illegal invaders refused to vacate the property and to engage in discussions with CGN, CGN sought a remedy through Guatemala’s legal system.

Recently, Hudbay was named in three lawsuits brought before the Ontario Superior Court which make serious allegations of wrongdoing by CGN security personnel in relation to the illegal land occupations and early 2007 evictions implemented under court orders and in relation to events that took place in Guatemala in September 2009. Based on extensive internal investigations and eye witness reports, Hudbay believes that the allegations in these matters are without merit and it is vigorously defending itself against them.

The lawsuits have been the focus of discussions on activist group websites and on social media, most of which have included vague, distorted and otherwise misleading accounts of CGN’s operations in Guatemala.

The following information has been compiled to provide the relevant facts and necessary context, which has been missing from the various online petitions and social media commentary.

Beginning in the fall of 2006, two years before Hudbay’s ownership, several groups who self identify as indigenous peoples began illegally occupying the CGN property in Guatemala. Totalling approximately 300 people, these groups congregated in several areas within the CGN property. In some instances, the occupiers claimed that the CGN property belonged to them; while in other instances they claimed that they had no place to live and that CGN’s property was “vacant” land.

In Guatemala, unilateral land occupations are a crime. The illegal occupiers were engaging in threatening conduct, including blockades. The illegal occupiers also were causing damage to the CGN property by, among other things, illegally cutting and selling mahogany and other precious woods, unlawfully clearing vast tracts of land, and setting fire to a CGN office and community hospital on CGN property.

Under Guatemalan Law, a prosecutor must implement and enforce an eviction order issued by the court. The implementation of an eviction order is carried out by the prosecutor with the support of the National Civilian Police and, if necessary, the Guatemalan National Army. It is Hudbay’s understanding that private security personnel are not used by a prosecutor to remove occupiers from land when eviction orders are implemented.

In January 2007, pursuant to court orders, the Guatemalan prosecutor conducted several legal evictions on the CGN property with assistance from the National Civilian Police and National Army. Hudbay does not believe the allegations that sexual assaults occurred during these evictions is credible and no complaints of this nature have been filed with the authorities in Guatemala. In fact, on the date the plaintiffs claim the sexual assaults took place, the police report indicates that no illegal occupiers were present when the prosecutor and members of the Police and Army attended to implement the eviction.

According to the prosecutor and police reports of the evictions, no CGN security personnel or any other private security personnel implemented the evictions. These reports also indicate that the evictions were carried out peacefully and without any injuries. Further, CGN records demonstrate efforts by the company to ensure that the evictions were peaceful and carried out in compliance with Guatemalan law. Hudbay understands that the police carrying out the evictions were not armed, although armed military personnel were positioned outside the direct area to prevent any escalation of the situation. Again, these legal steps took place before Hudbay had any involvement in the project.

Some time prior to 2009, a group of illegal squatters began occupying an area of the project lands owned by CGN known as Area 217. In April 2009, CGN negotiated an agreement with the illegal occupants to facilitate their voluntary return to their homes in the nearby village of Las Nubes. The agreement was negotiated with input and support from various agencies, was certified by the government, and included commitments by CGN to implement improvements for the neighbouring community, including:

Construction of a school house

Establishment of a water delivery system and a new water tank

Building of new house pads and the supply of building materials

Improved road access

CGN also agreed to pay wages to local residents for their contributions to these initiatives. All of these projects were completed in May 2009.

While the majority of individuals honoured the freely negotiated agreement and returned to their homes, a small number continued to occupy illegally Area 217 on the CGN property and to refuse to comply with the negotiated agreement.

The week prior to September 27, 2009, a new illegal occupation had begun to take place and these new illegal occupants started to erect dwellings on the CGN property. On Sunday, September 27, 2009, a meeting was held between the regional governor and the illegal occupants in Area 217 in an attempt to persuade the latter to comply with the May agreement. No evictions were carried out and none were threatened.

When the meeting concluded with the agreement that a further meeting would be scheduled, vehicles departing from Area 217, including the governor’s motorcade, were attacked on the road to El Estor by a separate group of organized protestors. According to the police report, more than 40 police officers were required to deal with protestors participating in a blockade. Ultimately, the governor had to be evacuated by boat across Lake Izabal.

The blockade appears to have been the catalyst for various confrontations that followed that day, including an attack on newly-constructed homes on CGN property. In these instances, CGN security personnel were instructed to evacuate the areas as quickly as possible without engaging their attackers.

In addition, the protestors attacked a CGN-sponsored community hospital on CGN property, resulting in extensive damage to the facility and equipment recently donated by a charitable organization. Police reports indicate that the protestors also broke into and ransacked the local police station stealing protective gear and weapons, including automatic firearms that were used to fire upon CGN personnel inside the hospital.

Throughout the attacks, CGN security and other personnel showed extraordinary restraint and acted only in self defence. Their measured response to the various attacks helped to prevent a further escalation of violence, thus limiting the number of injuries on both sides of the confrontation. CGN has confirmed that five of its security personnel were injured during the incident, one of whom required emergency transport to Guatemala City for medical treatment. Unfortunately, a protestor died that day. Based on internal investigations and eye witness reports, Hudbay believes that CGN personnel were not involved with his death.

These events are being actively investigated by the Guatemalan authorities, with whom CGN is cooperating to ensure that all the facts are uncovered and justice is served. In December 2009, an arrest warrant was issued against CGN’s head of security. The warrant was issued, in large part, based on statements made by four alleged eye-witnesses to the death of Mr. Ich Chaman. Since that time, three of the four alleged eye-witnesses have recanted their earlier statements to the Guatemalan prosecutor, and have claimed they were intimidated into lying about what happened on September 27, 2009.

Following the September 27, 2009 incidents, a petition signed by more than 2,400 individuals from the El Estor community was delivered to government authorities, condemning the protestor attacks and requesting that the Guatemalan government intervene to prevent violence of this kind.

We hope these facts and this context will help people recognize that Hudbay takes its role as a corporate citizen seriously and respects and protects human rights wherever Hudbay operates.

As a responsible member of our communities Hudbay also continues to seek ways to play a constructive role in defusing possible sources of conflict. As part of this effort, in 2011 Hudbay’s Board of Directors approved a formal Human Rights Policy, which is available on Hudbay’s website. This Policy largely reflects practices already in place at Hudbay, and articulates the company’s commitment to human rights. Key aspects of the Policy include:

Ethical business practices

Hudbay’s commitment to respect the rights of labour, and to protect the health and safety of workers

Hudbay’s commitment to community participation and consultation, to contribute to long-term and sustainable opportunities for communities, to respect communities’ legal rights, and to participate in a collective effort to promote the respect for human rights in the communities where we do business

Hudbay’s commitment to employ security measures that respect human rights including the adoption of the Voluntary Principles, and the United Nations (UN) Code of Conduct for Law Enforcement Officials

More information on our efforts in this area can be found in our annual corporate social responsibility (CSR) reports.